K&D Group sells big Marsol apartment complex

Deal part of developer's plan to focus on downtown,
other areas

K&D Group, the big apartment developer and operator based in Willoughby, has shed its massive, six-tower Marsol Apartments complex in Mayfield Heights.
The new owner of the 980-suite property visible on the southeast side of the Interstate 271 and Mayfield Road interchange is an affiliate of Morgan Management of Rochester, N.Y. Morgan owns apartments through its Morgan Communities brand, and it also owns office buildings, self-storage properties and RV parks. The newly formed Morgan Marsol LLC holds the property, according to public records.
Morgan is no newcomer to Northeast Ohio. Morgan affiliates also own the Bingham Apartments in downtown Cleveland's Warehouse District and the DeVille Apartments in Beachwood.
Cuyahoga County land records filed May 2 do not disclose a sale price because the companies swapped the limited liability corporations that own Marsol.
Doug Price, K&D Group CEO, said K&D traded the complex because it wants to reduce its exposure in some markets and invest in other areas, such as new downtown residential developments.
On Mayfield Road just east of the Marsol property, K&D owns Gates Mills Towers, a 1,000-suite property bordered by a forest in Mayfield Heights. Mr. Price said K&D plans to retain Gates Mills Towers and invest $3 million this year updating it.
Gates Mills Towers was last renovated when K&D bought it in 2004, the same year it paid $32 million for Marsol, according to county records.
“Timing is everything,” Mr. Price said, as investors have a strong appetite for apartments.
Mr. Price refused to say how much Morgan paid for the entity that owns Marsol.
However, K&D is clearly money ahead.
A $35 million loan from Citigroup Global Markets Corp. to Morgan — recorded the same day the Marsol transferred — indicates a higher value for the property, as the loan amount would not reflect the down payment the acquirer put into the transaction.
Mr. Price said K&D had the Marsol “selectively offered” by brokers Michael Barron and Dan Burkons of Marcus & Millichap's Cleveland office, so it did not put the property in position to receive multiple offers.
Mr. Barron said the Marsol's new operator plans to upgrade the complex with improvements inside and out.
Robert Morgan, founder of Morgan Communities, did not return two calls from Crain's Cleveland Business last week.
The Marsol now is listed in Morgan's portfolio on its website, www.morganmanagement.com. n